Business And Government – Allies Or Antagonists In Solving The Big Issues?
In the midst of a widening chasm between the wealthy and the working poor – and exactly three months from the election – one of the most critically important and far-reaching debates this year is what role both government and business must play in solving the nation’s biggest problems.
This question is extraordinarily urgent. More people die of COVID-19 each day, and low wage, essential workers – many of whom are Black and brown Americans – are most likely to be impacted. Now, we’re in a moment where it’s unclear whose job it is to ensure even basic safety and safety net protections in this crisis. Provide and require masks? The largest companies have stepped in when the government has not, but many business leaders don’t feel empowered to enforce their own mask requirements, leaving many customers and workers still at risk. Protect people at work? Companies are trying, without clear guidance from OSHA – the agency created to protect people at work. Provide support for the unemployed? Congress continues to debate, while the business voice is largely absent.
Whose responsibility is it to fix this? Government, which moved decisively in early days but now continues to be bogged down in politics? Or business, which until recently, had universally been charged with maximizing profits above all else? Meanwhile, the American public is seeing this crisis with a largely critical lens. In our recent survey, fielded in collaboration with our partners at The Harris Poll, we heard that most people don’t think the current form of capitalism is working: Only a quarter of respondents believe our current form of capitalism ensures the greater good of society and just 29% believe it works for the average American. However, in the midst of a federal government leadership vacuum, our partners at The Harris Poll heard 72% say that they trust companies more than the federal government to help find solutions on COVID19 and racial equity.
Last week, N. Gregory Mankiw argued in The New York Times that business leaders should not be expected to be social leaders, that CEOs should focus solely on maximizing profits, and that government is the solution to addressing society’s issues.
Meanwhile, Bernie Sanders and others have ushered in a serious conversation about the role of government, calling for elimination of certain industries – like student loan providers and private health insurance – and for increased constraints on the market.
This debate – whether it’s government or business that’s responsible – is a familiar trope. It’s also a fundamental mischaracterization of the problem.
This dynamic is literally decades in the making. This September will be the 50th anniversary of Milton Friedman’s declaration that the sole purpose of business is to make a profit. Since then, we’ve seen corporate America not simply adopt that mantra, but lobby government over five decades to largely ensure that laws were in line with that approach. The role of government – in the minds of influential business leaders and companies – has been to stay out of the way, advancing the idea that limited government was the only way for business to win. For years, corporate America was very explicit about what it wanted: no new regulation. Little engagement with government, especially on the big stuff. No “uncertainty.” Of course, there was some engagement on specific issues – healthcare, skills and retraining among them. But the common belief in the role of federal government policy? Leave markets alone, and don’t intervene.
Now, in the midst of the crisis, the muscle memory isn’t there for corporate America and the federal government to come together to solve the most significant issues of our generation. Problems that require multi-sectoral solutions (by the way, it also means all those people and now saying that it’s the government’s job to fix the social problems have pretty short memories. Many of the same people advocating for this position just spent 50 years limiting the government’s ability to take on these same challenges.).
To get on a different path, the first step is to remember that a healthy government and healthy market are profoundly interconnected. We’re experiencing in real time the breakdown of what happens when the interests of markets and government aren’t aligned, and when a lack of investment in government means both vital services and vital trust among citizens are in short supply.
Here’s how I propose we think about it: Government creates the floor. It protects workers from abuse and sets minimum standards for issues like safety, wages, access to education, and more. It protects the climate from massive degradation. It protects consumers against pollution, ensuring safe products, services, and air to breathe. In this moment, the government is responsible for making sure workers have PPE, safe workplaces, unemployment insurance, paid sick leave, and testing environments.
Meanwhile, the market creates the ceiling. Businesses compete to hire the best employees, find the most loyal customers, act in their long-term interest to ensure that risk is appropriately priced and there are long-term plans for success in our changing world. That means companies are working to create the best jobs in a pandemic (see Verizon), best consumer experience, and setting up for long-term success when we eventually emerge.
And together, government and business must figure out a system that will allow companies and workers to survive in this moment and thrive in the future. Each needs the other, and if we don’t have both, our society is totally off balance. We need to get back to balance, and if we don’t strengthen both, we do a disservice to ourselves, our businesses, and our country.